1. If the assumptions needed for the First Fundamental Theorem of Welfare Economics are met, then the marginal rates of substitution between two goods for the last unit of each good consumed will be equal across all individuals, and their sum will equal the marginal rate of transformation of producing these two goods.

2. The graph to the right is a correct representation of the case of positive externalities.

3. For public goods the marginal rate of substitution between two goods for the last unit of each good consumed will be equal across all individuals, and their sum will equal the marginal rate of transformation of producing these goods. 

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Answer rating: 100% (QA)

Step 12 Given figure shows the externality or situation of market failure Step 22 1 Given statement ... View the full answer